Monopoly profits

Stock market share indexes are still struggling to get back to where they were in January. The exception is the NASDAQ Composite that has gone up by 5% since then. The NASDAQ includes the major internet companies that have continued growing and making profits, but this has often been detrimental to other sectors of the economy. When Google earns more from advertising, other advertisers earn less, and when Amazon sells more, other retailers sell less. The internet expanded the market to some extent, but resulted mainly in a redistribution of market shares. There has been a short list of winners (FAANG), while the list of losers gets ever longer. This is reflected in share indexes, where brick-and-mortar is outstripped by virtuality. It is also a sign of expanding digital mechanisation.

Production is about transmitting value. Buildings, machines, energy, raw materials and labour, all add their share to the price of the produce. Buildings, machines, energy and raw materials can only pass on what they cost, unless they are a monopoly, in which case they add as much value as customers can pay. Labour, however, is able to add more value than it costs. And, except for monopolies, labour’s unpaid added value has been the source of profits ever since they exist. Machines increase labour’s productivity and, if demand does not grow equally, this tends to reduce the amount of labour employed. Production grows and employment shrinks, with the ultimate goal of a fully automated system. When labour is no longer present to be exploited, profits are the surcharge of trademarks, patents and copyrights, and of price agreements between competitors.

The production of goods employed less and less labour, which was diverted to the provision of services, where it was not yet being replaced by machines. But now more and more services are supplied by machines, and this is only a beginning. When machines are doing most of the work, profits can no longer be extracted from labour. They must become the surcharge of monopoly. De facto monopolies are taboo, of course, but patents, trade names and copyrights are rarely contested, and they are the next best thing because they exclude competition by an identical product. And import tariffs or subsidies are old and tested methods for insuring profits. However, the World Wide Web has created world-wide corporations that have an effective monopoly over most of the planet. Machines do all the work and their uniqueness makes them profitable. Machines are replacing humans, who are left with the work machines cannot be bothered with, complex low paid jobs such as window cleaning, emptying dustbins, or cutting hedges. The problem is that, as machines push humans down to the lowest rungs of income, there is necessarily a lack of demand for machine-made monopoly profits.

Great again…?

The 26^th of April 1937, at the height of the Spanish Civil War, German planes bombed the Basque town of Guernica y Luno. Some two thousand people died. This wanton killing of civilians provoked a general outcry and a famous painting, but no concrete actions. The 6^th and 9^th of August 1945, in the last throes of war against Japan, American planes bombed the cities of Hiroshima and Nagasaki. Some one hundred thousand people died. This premeditated mass murder of civilians brought some condemnations, no celebrated artwork (1), substantial applause and widespread justifications. Between these two events aerial bombing of urban targets had become the norm. Nuclear fission had just multiplied a bomber’s pay-load by over a thousand, and any way Americans had won the war, vae victis. However, apart from America’s diminutive allies, the Soviet Union also claimed victory. And there were already tensions in Europe, along the dividing line between occupying armies. So, with Soviet forces gathering just off the Japanese coast on the Sakhalin peninsular, a similar situation was avoided by Japan’s unconditional surrender. Little Boy and Fat Man were a demonstration of unprecedented destructive power, a message to Moscow.

1946 did not bring peace for everyone, there was still fighting in Greece and China, and various anti-colonial insurgent movements were being repressed, but it was the dawn of a New World Order. Two of the world’s major industrial regions, Western Europe and East Asia, had been largely reduced to rubble, while the third, North America, was unscathed. Being the only nuclear power and producing half the world’s wealth, the USA was able to impose its economic model by aiding reconstruction, its cultural model with movies and records, and its ideological model through radio channels and CIA subversions. But America was not alone on the planet. Soviet Russia and, after 1949, the People’s Republic of China were powerfully armed and presented an alternative vision. This line between two worlds became a source of conflict and war. Millions would be killed and millions more would suffer on both sides because of that fatal divide.

The Cold War was a mutual destruction arms race fought with words, with threats and bluff, slander and lies, and with frequent ultra-violence more often than not by proxy agents. Except that one side was supporting nationalists who were trying to break the yoke of colonial dominion, while the other was placing puppet dictators who acted in their patron’s interests. The Soviet Union held the moral upper ground (China had gone its own way after Stalin’s death in 1953, with its own personality cult around Mao Zedong), and this position helped offset the huge economic unbalance it had with the US and its vassals. Anti-colonialism, followed by anti-imperialism, was a powerful propaganda tool, until it was turned around by the Soviet invasion of Afghanistan. Afghanistan was one of the few countries that had not been colonised by Europeans. The British had tried unsuccessfully and finally left it alone as a buffer state between their empire in India and the Russian empire. However, the Cold War between the USA and the USSR allowed no neutrals. So, after several regime changes, in 1979 when events in Iran were the centre of attention, the Soviet army crossed the border and arrived in Kabul for Christmas. This intervention would be as costly for Russia as had been the intervention in Vietnam for America. But the US survived, whereas the USSR did not. When it withdrew its troops in 1989, it was so weakened that it collapsed two years later.

America was all-powerful twice during the 20^th century, the first time on the ruins of Germany and Japan, the second time after the ruin of Soviet Russia. In both cases, America presented not only a military superiority but also a moral one, however dubious. The fallen foes had it coming to them, and America was the instrument of justice. But the myths of the beacon of enlightenment and of the knight in white armour did not hold for the Vietnamese quagmire, nor do they today for the endless fighting in Afghanistan, Iraq, Yemen, etc. These were and are acts of sheer power against puny adversaries made to look as mean and dangerous as possible, and who refuse to abandon their cause, which is a tribal, ethnic, religious, traditional community and its volition to survive (2). America shines when it takes on the strong, not when it brutalises the weak. In today’s world the only heavy-weight contender is China allied with Russia. Does Donald Trump intend to make America great again by ruining the only other bullies around? And how will he make them seem more contemptible than he is?

1. There has of course been a lot of art on these two atrocities, among them Alain Resnais’ 1959 film “Hiroshima mon amour”, but none have been publicised like Picasso’s painting.

2. A surprising number of people would rather die than give up their way of life. Many of them have already disappeared and others are being pushed to extinction. Some go down fighting and some commit suicide.